The Cost of Katrina: What Disaster Relief May do to the Budget

If you had an expensive tragedy in your household, how would you pay for it? Would you borrow money or figure out a way to earn extra income? Would you cut expenses? If so, which expenditures could you do without? What if you had to compromise some basic needs like health care and even food?

These questions are not unlike those forced upon Congress in the wake of Hurricane Katrina. Legislators are trying to decide how to pay for relief and reconstruction while keeping up with the bills.

Many Republicans want to cut spending while cutting taxes or, revenue. Democrats say that they want to focus on legislation that will help to secure Katrina victims before spending time on a controversial budget bill.

Republican efforts

House Speaker Dennis Hastert has proposed amending the budget resolution (and Congress hasn’t changed the budget mid-session since 1977). The amendment would slash $50 billion in five years from spending on basic programs or, mandatory spending. More specifically, it would cut funding from Medicare and Medicaid health care programs.

Further, Hastert’s proposal would further reduce the 8 percent of the budget that is up for review by Congress each year. This spending, known as discretionary spending, is the primary site of the cutbacks.

One of the most controversial features of Hastert’s plan is the 2 percent cut to military spending, which causes concern among both Republicans and Democrats.

Defense Appropriations Subcommittee Chairman Bill Young (R-Florida) is against this portion of the plan. He says that cutting military spending at a time of war is a risky proposition. He believes even a 2 to 3 percent decrease could cut into funds for body armor, Humvees, and ammunition.

The Bush administration has not yet responded to Hastert’s proposed cuts to defense. But apart from that section of the amendment, Hastert’s strategy looks a lot like Bush’s own budget proposal. However, the White House version depends on corporations paying higher pension fees in order to offset Katrina spending, an idea to which neither the House nor Senate has agreed.

Democratic response

Senate Minority Leader Harry Reid (D- Nevada) is sharply opposed to Hastert’s new budget plan. He says that the amendment would cut deeply into food stamps, farm subsidies, and health care programs that Americans need - especially those hit by Katrina.

Reid and other top committee Democrats sent a letter to Senate Majority Leader Bill Frist (R- Tennessee), urging him to consider other Katrina-related legislation before cutting social programs and taxes.

Below is some of the letter:

"...beyond approving emergency funding for FEMA and a limited package of tax changes, the Republican-controlled Congress has done little to assist survivors…In our view, hurricane and energy price relief should be Congress’ top priorities. Yet rather than addressing the urgent needs of survivors and families and businesses suffering from rising gas prices, the Republican congressional leadership is pursuing reconciliation legislation that could only worsen their plight, with cuts in Medicaid, food assistance and other benefits..."

Many Republicans may argue that Congress has already devoted billions of dollars to hurricane relief for the very purposes mentioned in the Democrats’ letter. From the Republican point of view, cutting spending to make up for those billions is the next step in a responsible response.

Should Congress cut programs like Medicaid and food stamps in order to help pay for Katrina relief and reconstruction? In your view, is it necessary to reduce these services or will cutting them make matters worse? Should we revise military spending to help Katrina victims? Do your representatives know what YOU think?

What do you think?

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Article Posted on: 10/14/2005